The Research Of City Commercial Bank’s Scale Economy And Scope Economy

Since the early1990s, we reform the urban credit cooperatives financial system. After nearly two decades of change, the size and the number of urban commercial bank is different. The original purpose of establishing city commercial bank was not to the expansion of its asset size and scope, but to serve for small and medium-sized enterprises and construction of local economic. In recent years, with the rapid development of banking and relax policy from the regulators, the balance sheets, number of branches and scope of business and products have extended on vary degrees. However, we cannot simply derive that the operating efficiency of city commercial bank has improved during the process based on the expansion of the scale and scope as well as the profits growth in after-tax. After reviewing related research literature on the performance of commercial banks, I will analyze the influence of the exist of economies of scale and economies of scope and the path they effect basing on the Adam Smith’s theory, the input and output theory of microeconomics and new institutional economics, etc, in this article. On that basis, combing the characteristics of the City Commercial Banks in our country, finding the causes and connotation of the economies of scale and economies of scope and then define the input and output of the City Commercial Banks in our country with Dual Method. Meanwhile, on the base of literature studying and mechanism discussing, I shall take panel data of168samples from21city commercial banks of15provinces and autonomous regions between2006and2013and then create fixed-effects model using translog cost function to make empirical analysis on actual operating conditions of the commercial banks,comparing the economies of scale and economies of scope of different city commercial banks with different assets, analyzing the performance characteristics of major,medium and small city commercial banks in conjunction with research methods in this article. Finally, the research results will be put forward opinions and suggestions for City Commercial Banks of our country.The empirical on the economies of scale and economies of scope shows that when it comes to the economies of scale, the City Commercial Banks in our country have overall phenomena on the side of economies of scale. Individually, the results of the article is consistent in the domestic and foreign related research, namely large commercial banks have lower efficiency compare with large commercial banks. In terms of the economies of scope, the City Commercial Banks in our country have dis-economies of scope phenomenon generally, however, the economies of scope, as a whole, presents a tendency of increasing with the passage of time. When it comes to the assets, the City Commercial Banks take on high coefficient of economies of scope; meanwhile, compare to the major City Commercial Banks, small and medium-sized City Commercial Banks show much more disadvantage in terms of the Internal Governance of Corporate, Quality of assets, Business Expansion and Customer Possessive Amount, etc. In conclusion, combing the results of the article and the characteristics of different assets scale, I advance relevant policy recommendations.